- The Washington Times - Wednesday, June 15, 2016

Two former U.S. Treasury officials cast doubt Wednesday on the prospects of a highly touted deal between Iran and the American aerospace giant Boeing, claiming concerns about Iranian money laundering and terrorism financing activities are likely to scuttle the agreement.

Boeing Co. officials remained mum Wednesday after Iranian officials said this week that a milestone deal was imminent, the biggest by far between a U.S. company and Tehran since the signing of the landmark nuclear deal last year that lifted many economic sanctions on Iran.

But critics say the deal, strongly backed by President Obama, has failed to reduce concerns that Iran remains a vital source of funds and banking services for the world’s leading terrorist groups.

“The risks associated with doing business with Iran haven’t changed,” said Chip Poncy, who headed Treasury’s office of strategic policy for terrorist financing and financial crimes through 2013.

Eric Lorber, a former attorney in Treasury’s office of foreign assets control, said the Boeing deal will likely face the same problem that has kept a similar deal between Tehran and Airbus, Boeing’s European rival, from getting off the ground for the past seven months.

The Airbus deal to sell more than 100 planes to the Iranians made headlines in January but “still hasn’t been finalized. And one of the reasons is that Airbus has had a terribly difficult time finding a private financial institution to bank the deal,” said Mr. Lorber, who appeared with Mr. Poncy on a conference call Wednesday arranged by the Foundation for Defense of Democracies, a Washington think tank whose scholars were critical of the Iran deal.

“I think Boeing is going to have a similar challenge,” Mr. Lorber said.

Secretary of State John F. Kerry, meeting with Iranian Foreign Minister Mohammad Javad Zarif in Oslo on Wednesday, said the Obama administration has honored its obligations under the Iran deal to ease economic sanctions and has even explained to foreign firms what they can do under the deal, according to The Associated Press.

“We have completely kept faith with both the black-and-white print as well as the spirit of this effort,” Mr. Kerry said.

Mr. Kerry told reporters he has repeatedly explained to the Iranians that there are limits on what the United States can do to encourage businesses to deal with Iran and said he thought Iran’s supreme leader, Ayatollah Ali Khamenei, and Mr. Zarif “are pressing to make sure” Iran gets what it is entitled to under the deal “as rapidly as possible.”

It’s also unclear whether Ayatollah Khamenei will endorse the Boeing agreement. The supreme leader this week complained that Iran has not seen the flood of deals and investments expected in exchange for signing the nuclear deal with the U.S. and five other international powers.

Keeping quiet

Boeing executives offered no details Wednesday, a day after Iranian officials said the agreement to buy commercial planes from the Chicago-based company was essentially a done deal.

“In coming days, details of the deal with this company will be announced,” Roads and Urban Development Minister Abbas Ahmad Akhoundi said Tuesday, according to the semi-official Mehr news agency.

However, Boeing officials said it was company practice not to discuss publicly “details of ongoing conversations we are having with customers.”

Estimates say the deal will involve about 100 new jets, both from Boeing directly and leasing companies. The transaction could be worth many billions of dollars for Boeing. But for now, the deal remains a broad outline of what a formal agreement would look like once Boeing has the necessary government approvals.

Boeing officials said “any agreements reached will be contingent on U.S. government approval” — the same sort of approval they needed to even begin negotiations with Iran. Although many U.S. restrictions remain on direct business with Tehran, aviation, a major source of U.S. exports, was one area where an exemption was granted.

Boeing has received approval from Treasury’s office of foreign assets control to begin discussions with IranAir but would still need a specific, final authorization to sell jets to Tehran.

It remains to be seen whether Treasury will grant such an authorization, said Mark Dubowitz, executive director of the Foundation for Defense of Democracies.

Mr. Dubowitz, who heads the think tank’s center on sanctions and illicit finance, said there is a fear that Iran may ultimately use Boeing’s support for terrorist activities and to back its allies such as Syrian President Bashar Assad.

“The concerns are that the American equipment is going to be used to ferry Iranian Revolutionary Guard troops to support the Assad regime in Syria,” said Mr. Dubowitz.

Boeing and other U.S. firms are “going to have to reassure regulators that any equipment is not ending up in the hands of the Revolutionary Guard,” he said.

Some Capitol Hill Republicans who opposed the nuclear accord are also raising questions about the Boeing sale.

“To say we have national security concerns would be an understatement,” Rep. Peter J. Roskam, Illinois Republican, told USA Today. “Boeing and the Islamic Republic should know the U.S. Congress will not look favorably upon any deal that jeopardizes the safety and security of the American people.”

Another potential kink stems from remaining U.S. sanctions on Iran that ban the use of dollars in trade with the Islamic republic. Unless such sanctions are lifted, the deal must find financing from non-U.S. sources.

Iranian officials have said they will need at least 400 planes to replace their fleet — one of the world’s oldest.

The France-based Financial Action Task Force, the primary intergovernmental organization combating illicit financial activities around the world, is weighing whether to downgrade its assessment of the risks to international companies considering doing business with Iran.

In February, the task force expressed concern about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, according to Foundation for Defense of Democracies, which said this week that Iran’s status is reportedly on the agenda for task force’s plenary meeting next week in South Korea.

This article is based in part on wire service reports.

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